Voluntary tax disclosure program for online sellers

Your Guide to State, Local, Federal, Estate + International Taxation

sales tax, use tax, voluntary tax disclosure program, online sellersThe Multistate Tax Commission (MTC) is offering a limited-time voluntary tax disclosure program for online marketplace sellers for sales and use tax, income/franchise tax or both. Participating states include Alabama, Arkansas, Colorado, Connecticut, the District of Columbia, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Oklahoma, South Dakota, Tennessee, Texas, Utah, Vermont and Wisconsin. The program runs from August 1 through October 17, 2017 and is open to:

  1. Taxpayers who have not registered with the state, filed tax returns with the state for the tax type or had any other prior contact with the state concerning tax liabilities.
  2. Taxpayers must be an online seller using a marketplace provider, such as the Amazon FBA (fulfillment by Amazon) program and have no location, property, employees or agents in the state except for the seller’s inventory stored at a fulfillment center.
  3. Taxpayers timely apply electronically during the initiative by either using the online application or the PDF application.
  4. Taxpayers must agree to register as a seller or retailer with the state and timely collect, report and remit sales and use tax by December 1, 2017 or file an income/franchise tax return for the period that includes December 1, 2017.

For taxpayers meeting the above criteria, the participating states will agree to waive sales and use and income/franchise back tax liability, including penalties and interest, for prior tax periods, without regard to any lookback period.

You can apply to a state for the voluntary tax disclosure program anonymously and will not be required to disclose its identity to the state until the taxpayer registers with the state and the voluntary disclosure agreement is executed. Additionally, the taxpayer can also withdraw the application for voluntary disclosure with any state at any time prior to execution of the agreement.

Application forms are available on the MTC’s website. If you have any questions, please contact your CPA for additional information.

Lauren J. Sweeney